" The New Normal Economy" better understand

www.google.com...

A network-wide series of reports next week on "The New Normal" will look at how businesses and personal habits have changed in the wake of the recession. "World News," "Nightline" and "Good Morning America" will all do stories, culminating in a "20/20" special on June 19

lots of coverage during prime time hours and i suppose other MSM channels may do something similiar


the gov't are master's (or try to be at perception management) this has been of growing importance to them as our economy has become more and more dependent on consumption and thus confidence and feelings of wealth....also it is true that this is used because it works to a degree and helps maintain enough optomism that IMO positively effects social "mood"....and also adds to ensure that something called the rule of law is followed in enough degree to keep society functioning soundly..and not revolting or challenging leaders

Lots of people hoped that this was just a regular recession in the sense that businesses will soon after get back to hiring workers (like they always do.....and the "economic cycle will resume" anew.........the problem is this is not the case....

Now you can listen and hope to "establishment experts" on TV who never predicted a thing right but are convincing none the less......or you can look at history and realize that most recessions are caused by the fed tightening credit and trying to cool credit expansion (and inflation) down......and then after a period of "tightening" where they accomplish this .....then they loosen again and the economy bounces back....usually a little stronger.......

the difference is the fed didn't cause this recession thru tightening.....the fed merely tried to stop the economy from collapsing from OVER in debtedness and leverage which eventually started the dominoe's when asset prices tied to tremendous leverage and debt began to fall.....Ray diallo of bridgewater (money manager and John maudin economist /money magager....as well as NUMEROUS other economists with blogs and loyal followers..not to mention "history" point out that this "downturn" was led by a over hang of debt that was beginnning to deleverage.....i.e a debt deflation process......this process is known in History to be synonomous with DEPRESSIONS.(read that again and do some searching of your own to discover that truth).......some are less bad than others.....japan had massive saving's and a relatively strong world economy which cushioned them we do not....but we do have the world reserve currency.....but that is not an equal trade off in this circumstance...(and we may not have it for long)

now not every depression is the same and there is hope that this depressionary process may be = to a long severe recession or "soft depression"

but the MSM has to prepare the people to adjust their expectations for the recovery down a notch or three....so that they don't become Too angry when things don't bounce back and so they can judge politicians more "gently".....as well as i'm sure some other reasons (which haven't popped into my mind)

and this provides the gov't with an oPP....which involves encouraging people to prepare for the inevitable future..seeing things from a "LENS" that is brighter i.e "a new normal".... not from a less optomistic but equally accurate one of " a very long recession or depression type unwind with faltering standards of living".....

ABC News President David Westin said the network has held a series of off-the-record meetings with economists, business leaders and regulators over the past year and he was struck by how they all agreed on one point: When the recession is over, things won't go back to the way they were before.

read that again and understand that perspective has the media's most positive way of putting it that things ......aren't really bouncing back for the people....but t's a new type of "recovery" with high unemployment ....low earnings..(for company's)......less luxury's....etc

"I was concerned that people in the media hadn't done enough to prepare people for that and we had to start thinking about it," Westin said

the one thing that stands out from this piece that relates to the stock market is that future earnings WILL Not bounce back in the process the economy is undergoing ......and this is not yet PRICED in to the stock markets...IMO ....because 3'rd and 4'th Q earnings are still forecast to turn positive and actually are quite agressve for 4'th Q (never mind earnins have been revised down like 12 straight times) don't get in the way of a hope based rally and tons of liquidity sloshing around.......but the thing joe 6 pack may want to take away is that although the stock market has turned a good rally you may want to start thinking about just being happy you recouped some losses and get out before another potental leg down. I think alot of $ could flow into any stock markets where the country's show better earnings potential going forward....i.e places where the consumer's are not "tapped out" will have more attractive valuations
This could occur earlier due to the bond market sucking funds out of equity's or later (around early Aug i have heard mentioned) when it becomes more clear that earnings in the 4'th Q will not be coming back....like the usual recession process....

[edit on 10-6-2009 by cpdaman]

Excellent thread. S & F for you CPD.

So what does this mean? That they have decided to not lie to us anymore?

The average idiots will be brainwashed into beleiving that less than average is the new average.

The mass morons are easily distracted and poorly educated. They will now likely convince people to settle for less in an attempt to drive down wages so that they can profit from people who have little to no self worth.

I believe the Hindu Brahmin have a name for this. It's called no class mobility for the unwashed. Are we seeing the beginning of a new caste system in America?

[edit on 10-6-2009 by In nothing we trust]

I too offer up my star and flag for you... Excellent insight and excellent reporting. I already understood the market trends and the coming/current depression. But that the networks are gonna come clean about it is very....telling to say the least....

I would bet on hyper inflation by August ...and hopefully not July.

Good OP! S + F!

Okay well I have a little bit better understanding of what is going to go on, so the recovery isn't really going to be a recovery. Our GPD will eventually go back to the positive because the debt will deflate and eventually we will have no where to go, but up.

Bad news is that won't translate into the way we are living now, people will save more and stuff like that?

Am I somewhere on track with this? OR completely wrong.

When the recession is over, things won't go back to the way they were before.

That right because people will be too pissed off with the media for reporting it all wrong.

Just wait until the fall of 09'. My sources are all agreeing it shall be bad. Worse than the crash of 08'.

Then you and every other person is going to be pissed!

S&F for you cpd! ...for looking deep beyond and putting it all together.
Nice work...and you have done the work of a surgeon.

Exactly...like you said, paint the picture so they do not have to "think"
what is going on here! Accept the reality...my 401K is gone, my retirement is gone...my house equity is gone...my goverment motors car is ?...my salary in slashed...and prices are going up? Gas is going up...water costs are going up...food prices are going up.

Imagine...as Tenticles said, when this fall the economy does not come back...only gets worse between now and then...

Starbucks has raised prices on large and medium...cut the price on small and mini...if no one else noticed...the company that is slashing stores and losing clientel to mc d's. Starbucks...the nerve! They raised prices yesterday! Just watch...

Inflation...yeah that is coming...and so is the long line at mc d's, unemployment, and the welfare office. Get used to it!

The new normal...yep Greta and Keith and Morning Joe lay the path...





[edit on 11-6-2009 by burntheships]

thanks for the reply's guys

I would say that with all we don't know about the exact path about the future.......as to the severerity of the unwind....that this thread and what i hope it could capture is the virtual certainty that the standard of living for the "ave" american isn't coming back to what it was built up to in the first 6-7 years of the decade........the recovery "bounce" is not taking us back there..........thus it is really just semantics and posturing to label a recovery because really what it will likely be is just a hope that we have stopped falling and reached a new reset point in the economy....

you can pad GDP stats with spending (but for how long with treasury borrowing rates rising is anyone's idea) ....you can dance around unemployment numbers and make faulty comparisons from "downturns" past because you fudge the definitions of unemployment and you take people who have lost their job and haven't found a new one out of the workforce (and unemployment calculatons)........the latter is really just used as damage control today.....while i believe it was born out of hope that the offshoring of jobs by big corporations would potentially have huge backlash and that this could sort of silence the negative effect that had on our employment levels (by hiding the loss of employment in official statistics )and stability as we became more of a service...consumption driven economy ....(we now needed asset bubbles to reach high levels of employment).....but those were the good ole days

I gotta go.......but would like to re-iterate that people can still make money in the new normal....it just wont be as easy......more competiton....also less baby boomers who drove "growth" will be around building up the nation's wealth.....they will be retiring i.e aging and the country will probably look back at the late 90's and first several years of 2000's as the good ole days economically speaking......the big queston i have over the next few years is how this "depressionary process" that i mentioned in the first post plays out will it be a "soft depression" like i hope or will it be something more treacherous.......i think the dollar's role as the world reserve currency going forward (while always seemingly on the "brink" in some economist's minds) will have a big say in that

[edit on 11-6-2009 by cpdaman]

reply to post by cpdaman


Okay, I got it, it will be harder to make money, but really the economy is resetting itself and close the wealth gap. With the debt deflation process the wealth gap will close because of decreased wages and peoples overall buying power decreases.

I guess the the thing that really worries me is getting knocked down to third world status. I still feel that America has a lot of wealth, but with the wrong policies it isn't unfathomable.

Thanks for helping to make sense out of the matter.

please read this (it will take two minutes)

besides the first post which covers alot of things except the LEVEL of how bad things will get..........those that may want to stay on top of things and stay aprised may want to read this

www.marketoracle.co.uk...

scroll toward the bottom (it is a VERY IMPORTANT and GOOD piece)....."the end game draws nigh".......it is not doom and gloom it is very academic yet relates to reality of the economy

basically it states that the policy's going forward need to reduce the Natonal Debt to GDP rate or at minimum stabalize it.............(and that this is especially important after the rate jumps up over the next couple years from all the bailouts and spending projects)

.lots of people know that household debt to GDP and financial sector debt to GDP are at very very high levels and one thing the gov't may due especally with the financal sector debt is to "insure" it.....against any losses with treasury funds.....so basically be willing to transfer the debt from the private sector to public sector.....because historically speaking Gov't debt to GDP ratio is in a very MANAGEABLE LEVEL.(80% or so now)......ya that's right......C no gov't pay's off their debt in a fiat money system......but they can't let it spiral out of control.......to understand the upper limit of sustainable debt-gdp ratio's without a country falling into chaos Japan's debt to gdp is around 200%......

so going forward it is imporant to have real growth to reduce the debt to gdp ratio *because the author states that once it ramps up like it will in the next couple years.......it puts the country in a delicate state.....where country's either see the rate spiral up and out of control or......stabalize at a high level* i.e japan and (some even bring it back down).......

he lists the growth strategy's that will help this occur....(think productive uses of debt....that go into tangible things....like we did after WWII) and not the crap that obama admin is doing now.....so basically this guy is concerned and this doesn't bode well for the question concerning how this "depressonary process play's out over a longer period"....i.e soft depression or something much more treacherous........and in the mean time the gov't realizes that in order to slow cook us the best they must prepare us for at least the best of these depressionary process'es .....i.e high unemployment .....lower standard of living.....etc...( by giving this the orwellian name of the "new normal" and helping us come to grips with a "slow recovery"......and in a few years if growth strategy's don't turn around (more productive use of debt) then they may well be ........Conditioning us AGAIN (downward \) of another "new normal" this time it will be 3'rd world living standards LITERALLy!!!!

this is really not a joke and probably my most important thread this puts things together....where we really are "as an economy" .......how this downturn is historically different than others....how the difference is identifiable as a debt deflaton...identifying this process as synonmous with depressions (historically).....understanding depression are long and drawn out but highly variable (soft depressions like japan to collapse like rome)....and that this is why the gov't will be conditioning us for a "new normal economy" which is really perception management and really just bringing our expectation in line with the reality thru the most optomistic lens.....and then finally Actually showing what needs to be done to fix things (Lower debt to gdp ratio after it elevates in the next couple years) because that time frame (2-5 years) out is a very delicate economic time whose policy....will determine how severe or surprisingly mild the depressionary process will be ( dependent on among other things the productivity of debt going forward)

there is pain coming but t we are approaching a cross roads this will either be a bad hangover or cardiac arrest

[edit on 11-6-2009 by cpdaman]

[edit on 11-6-2009 by cpdaman]

Do not have any illusions. Modern citizenship = TV audience.

Their main effort will be to ensure everyone has a TV and plenty of time to watch direct broadcast of Congress debates all day long. What else "constructive" could all those jobless people do but watch the circus? That is the new measure of "average".

Originally posted by In nothing we trust
So what does this mean? That they have decided to not lie to us anymore?

The average idiots will be brainwashed into believing that less than average is the new average.

No it means that the new phrases will be created and others will be banned, now the new phrase is better than expected and not as bad as expected.

It means that we are still in the crap but that is ok, just learn to live with it.

Still The American dream will become the dream of everybody else with money (including foreign) but not for the America hard worker anymore as we are now officially a nation that can not only produce anymore, but can not spend anymore and can not find jobs anymore.

S&F cdpaman!

To be honest I'm not sure where we might be in the "depressionary process".

I've read some of the comments about a GD II from this thread.
www.abovetopsecret.com...

This time around the fed is overstimulating up front, which apparently is aimed at altering the course of the economic downturn into a "soft depression" as you said.

Key statements by Bernanke about any recovery being non robust and disappointing seem to support this probability.

Equity markets and oil prices continue to skyrocket as though this were the simple type of recession we are familiar with caused by over tight credit policy.

At this point I am trying to stay humble and consider the possibility that I may have some permabear blinders filtering out scenarios for a more robust recovery. I'm disillusioned, how does the US avoid getting into the high debt to GDP ratio that led to Japans "lost decade"?

Back in February the director of national intelligence stated that the *world* economic crisis was the number one security threat to the USA. They talked about jump starting the US economy as a preemptive strike without giving details. My guess would be that some of the unusual irregularities we have been watching in the media and markets recently is this plan in action. The analysts probably felt money lost up front is money better spent than mopping up a global disaster later.

intelligence.senate.gov...

No surprise that we would not be able to out guess the CIA.



[edit on 13-6-2009 by fromunclexcommunicate]

they can't jump start the economy unless banks lend..and they are not ..so until they do or unless they plan on nationalizing the banks (and taking over their lending decisiion to appease angry voters)....because right now the banks aren't lending M1 multiplier a measure of the fractional reserve lending "action" dropped like a rock...

research.stlouisfed.org...

going foward the banks likely will not be about to lend for a LOONNGG time because the job market won't be getting any better........and people's debt principal is not getting renegotiated (only interest rates)...so people will be indebted debt slaves for a while with continuing (new normal) levels of high unemployment as far as the eye can see...which puts corporations (lower revenue /earnings) and consumers as high default risk's for loans....

that M 1 mult chart... appears to be the chart to look at to see if the "credit" life blood is getting back into the REAL ECONOMY

until that happens

when the M1 mult is in the toilet.... the only thing the gov't ....CIA .....PPT can do to "stimulate the economy" is to tell Green shoot LIES enough times till people believe them!!! and the main confimation (since they want to believe in a recovery) will be the Stock market not breaking below the march lows....... the sheep will look at the high unemployment....high foreclosures....and rising corporate defaults in the "new normal" recovery .....and say hmmmm......that's weird ......

the banks will continue to book PHANTOM profits due to absolutely Insane accounting rules where

JPMorgan Chase reported a dazzling profit partly because the price of its bonds dropped (theoretically, they could retire them and buy them back at a cheaper price; that’s sort of like saying you’re richer because the value of your home has dropped); Citigroup pulled the same trick.

yes you read that right lol

dealbook.blogs.nytimes.com...

and here's a additonal loop hole

www.nuwireinvestor.com...



[edit on 13-6-2009 by cpdaman]

not that anyone cares but changed my mind on my last post (can't go back an edit it)

i used to think the M1 mult declining 1. showed less lending 2. was valid date representative of "monetary velocity" in the first place

but i don't anymore.....simply doubling the adjusted monetary base (thru shifting bank capital to excess reserves portion of the former)....will cause the Velocity to fall like a rock...even if lending doesn't change much....because the denominator (adjusted monetary base doubled).... i think the concept of velocity is probably valid but the formula "money supply/ adjusted monetary base.....has too many flaws to be used...

not to mention that i don't think this covery these statistics account for the effect the "shadow banking system" i.e securitizaton of loans and derivatives has on velocity......when it was a large effect and it is not taken into account

anyhow i would say that wether we get our debt /gdp ratio to stop soaring a couple years down the road (i.e the productivity of our debt needs to increase) or we may in less than a decade have much worse than a resetting of the economic rung lower that we will likely see over the next few years

Today we saw the world markets falling on continued poor economic news. Russia is still supporting the US dollar based on a lack of stable alternative.

After the housing and credit collapse there just is not a lot of money available from consumers at the bottom of the pyramid to fuel a strong recovery.

Our equity market indexes are way up around 15 times earnings on some kind of technical rally, but that is really still only an illusion without good old fashioned manufacturing demand and earnings growth.

This is not economics 101 as I learned it. I've been screaming bear market rally for two months now and watched as the Dow continued to climb.